GAO report cites deceptive short-term health insurance plans in Pa.

Ioannis Pashakis//September 17, 2020

GAO report cites deceptive short-term health insurance plans in Pa.

Ioannis Pashakis//September 17, 2020

U.S. Sen. Bob Casey blamed the Trump administration for promoting “junk” health insurance plans after a federal report found that some sales representatives of short-term insurance plans were using deceptive sales practices.

This week, the U.S. Government Accountability Office released the results of a series of covert tests involving 31 sales representatives in Alabama, Florida, Kansas, Pennsylvania and Wyoming.

The tests targeted companies offering plans exempt from a Patient Protection and Affordable Care Act (PPACA) provision requiring providers to face a tax penalty if they fail to offer minimum essential coverage to customers.

The tests were conducted from October 2019 to August 2020 and involved a series of covert phone calls. During the calls, the office would interact with a sales representative and try to purchase a plan while telling the representative that they had a pre-existing condition.

PPACA-exempt plans such as short-term, limited-duration insurance, which are generally used to fill gaps in coverage, can be sold directly to consumers and are not penalized for excluding coverage or charging higher premiums for pre-existing conditions.

Because they are not mandated to comply with the act, these plans are generally less expensive than other health plans, according to the U.S. Government Accountability Office’s report.

“These plans are not a long term alternative to comprehensive coverage,” said Insurance Commissioner Jessica Altman of the Pennsylvania Insurance Department. “Consumers may see upfront savings but those will likely prove false.”

Of the 31 covert tests, the accountability office found eight examples of sales representatives who engaged in potentially deceptive marketing practices.

“While conducting the covert tests, we were provided with applications containing terms and disclosures about the purchase that we were required to sign electronically,” the report states. “However, the oral descriptions provided by the sales representatives did not always align with these terms and disclosures.”

In one example cited in the report, a sales representative told one of the covert callers that their recently diagnosed diabetes would be covered under a plan. When the office later obtained the application she had filled out for the caller, it said that he had not been treated or diagnosed for diabetes, which would allow the insurance to be purchased but would not allow the caller to receive coverage for their condition.

Casey, who is currently working on a bill that he said would hold companies and brokers accountable for such practices, said that use of these short-term plans as long-term coverage has proliferated through the Trump administration’s promotion of them.

“Substandard insurance plans were allowed to flourish because of the actions of this administration,” he said. “We call them junk plans because as the report indicated, they lure customers in with the promise of cheap health insurance, but they don’t cover comprehensive health care.”

In 2018, the Trump administration issued new rules to expand the plans from a duration of three to 12 months, with the option of renewing them for 36 months. The administration’s expansion was upheld in federal appeals court in July.

Despite the plan’s inability to cover preexisting conditions, President Donald Trump has said that the plans offer “much less expensive health care at a much lower price.”